Dollar rally fizzles in Asia

TOKYO: The dollar edged down against the yen in Asia on Friday after rallying on good economic data, with a first confirmed Ebola case in New York impacting risk appetite.

The dollar was at 107.94 yen in Tokyo midday trade, down from 108.27 yen in New York Thursday afternoon though still above 107.24 yen in Tokyo earlier Thursday.

The euro bought 136.65 yen, down from 136.93 yen in New York, while inching up to $1.2657 from $1.2647.

The safe-haven yen lost ground Thursday with risk sentiment lifted by encouraging Chinese manufacturing data, solid readings for eurozone business activity and good US jobs data.

The dollar rose into the 108-yen range but the rally fizzed a little in Asia on Friday.

“It was all going so very well, until red headlines (early Asian time) hit the screens saying that a patient was being tested at Bellevue hospital in NYC for suspected Ebola,” National Australia Bank said.

“This news had the effect of bringing USD/JPY — the current high beta bellwether for global risk sentiment — down 30 points from 108.35 yen to 108.05 yen,” it said in a note.

US news reports said a doctor who recently returned to New York from treating Ebola patients in Guinea tested positive for the deadly virus Thursday.

Hiromichi Shirakawa, research analyst at Credit Suisse, also warned against too much risk-taking driven by speculation about monetary policies.

He noted risk appetite in financial markets had grown again particularly on speculation that the European Central Bank will start buying riskier corporate bonds.

Other factors contributing to the mood include speculation that the Federal Reserve would put off ending its massive stimulus programme or that the Bank of Japan would launch additional easing measures by the end of the year, he said.

“This return to the ‘risk-on’ sentiment comes basically from speculation about and hopes for policy measures,” he said in a note.

“But the policy authorities are unlikely to be so friendly as financial market think. The ‘risk-on’ sentiment at the moment is weak,” he said.-AFP